What's Happening In Real Estate In 2022
The housing market has been keeping us all on our toes for the last couple of years, throwing us unexpected situations, multiple offers on homes, low inventory, and low days on market, causing real estate experts to adjust to a 'new normal' nearly every day!
So as we turn the page to 2022, many are asking the question: what can we expect from the 2022 housing market? Industry experts weigh in, read their perspective below.
Inventory continues to be a challenge for interested buyers, and the market is still favoring sellers with record price growth. Did you know that home prices appreciated 19.9% between August 2020 and August 2021? That’s a new 12-month record.
But some experts say we may have reached a turning point, basing their predictions on several factors including possible rising interest rates. Additionally, interested buyers are stepping back from the bidding wars, as their buying behavior is starting to return to pre-pandemic levels.
In looking at 2022 and what we can expect from the housing market, there is a lot of disagreement amongst economic forecasters. Some believe that the cooling trend will continue into the new year, while others believe we could see price growth that is the highest on record.
According to Zillow and Goldman Sachs, they believe that demand from first-time millennial home buyers will continue to soar, however we are dealing with a nationwide issue with supply. There are not enough homes to go around and meet the demand.
On the flip side, Freddie Mac and Fannie Mae believe that U.S. home price growth will be 7% and 7.9%, respectively. That’s hardly the growth we have seen over the past year of 19.9%, which is four times the average level. In addition, both Redfin and CoreLogic see 12-month prices falling even further, mostly due to rising mortgage rates.
In that regard, the Mortgage Bankers Association predicts that the median price of existing homes will fall by 2.5% between Q4 2021 and Q4 2022. Their forecast is based on the average 30-year fixed mortgage rate that will hit 4% by the end of next year. While that 4% number may not seem consequential at first glance, it would add an additional $90,000 in cost to a $500,000 fixed-rate mortgage over the life of the loan.
The real estate market continues to remain red hot in Orange County. If you’re interested in discussing your real estate plans for 2022, please reach out to us. We would be happy to assist you.